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Simple Saving Strategies for Parents

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As all parents are all to aware – raising children in this day and age is becoming ever more demanding – financially in particular.  From even before they are first born, the expenses start totting up… and there is no set end date to the end of your parental duties!

It can be quite overwhelming the thought of being able to do your best financially for your children, though to get you started on some basics, here are a few simple strategies to get in place for families that are growing:

The Household Budget
After carefully totaling how much cash is coming in, you make a budget according to what you could manage and can track the outgoing expenses.  This should always be a first step. From there stop and think what could be done in order to improve the budget? Its usually cutting down on any expenses that seem less necessary.

Have a crisis fund
Make sure that you set aside a fund for any emergency crisis occurring when developing your budget for the family. You never know when the car might need repairs etc, and its essential to have money put aside for the unexpected as then there isn’t the panic of where to get an extra £250 for example. Just £20 a month put aside can almost cover that amount in just 1 year of saving.

Know what things are essential spending when it comes to the kids
Its all too tempting to want to buy every cute toy etc you can get your hands on, but really think about how many toys and clothes your child actually needs. They outgrow both things very quickly, and you’ll find most parents regret the amount they buy afterwards.  They are also more likely to appreciate the things they do actually have then!

Plan for their further education

Its not free anymore so set aside something, however small, for further education or even driving lessons etc.  A small amount regularly adds up over the years and will make a lot of difference at the time.  Choose saving accounts wisely, think about interest rates and take advantage of any tax free allowances you each are entitled to.

Think about your future too
Think about retirement plans, life insurance and a will too. It all seems so far off when you are young and have small children, but the time will come and its best to have been financially prepared.

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Savings Accounts: Interest vs Flexibility

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One of the most difficult things when it comes to choosing the best savings account or ISA is balancing flexibility with returns. With interest rates currently languishing at very low levels, it is tempting to look for as much interest as you possibly can in order to try and make the best of a bad situation. But the highest-interest accounts usually compromise on flexibility, often by requiring you to leave your money untouched until the end of a given term.

For some people, tying up a portion of their money for a few years is no big deal. But for others, it can be very difficult to know where to strike the balance. Should you settle for little interest in order to keep full access to your funds, or should you give up some flexibility to receive more money in return?

Your Situation

Obviously the single most important thing to consider is your own, personal financial situation. If you have any serious doubts that you can afford to have anything but complete, instant access to your savings you should choose your account accordingly. Lower interest will unfortunately be the price you pay to have the flexibility that you need.

That being said, not all fixed-term accounts completely close off access. By carefully considering the individual account, you may be able to get better interest without putting your financial situation in danger.

Withdrawal Penalties

With a fixed-term account, you won’t necessarily lose access to your funds completely until the term is up. Rather, you will often face withdrawal penalties. These might be an outright charge or, more likely, loss of interest on the funds you withdraw for a set period. This means that, on the funds you withdraw, you effectively get a lower interest rate. However, that interest rate can still be quite attractive compared to true flexible accounts, and if your funds stay in there for a reasonable amount of time before you withdraw it can still allow you to maximise the interest you receive.

This is obviously useful if you need to access your funds before the term is up after all. It is also handy for people who want to seek the best rates. On the face of it, one of the disadvantages to signing up to a long term such as four or five years is that, if interest rates improve midway through the term, you will not be able to take advantage of the new, higher-rate accounts.

Supposing you are in a five year term, with 6 months lost interest as a penalty on withdrawn funds. If you find there are better rates in two years’ time, you can withdraw your funds and lose a quarter of the interest you have accrued. This will almost certainly still result in a better rate than an instant access ISA. It will also often be equal to or better than a two year ISA, with the added bonus that you choose how long you allow the term to continue. Special calculators can help you clarify how rates compare.

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Might you be Due a PPI Refund?

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The PPI scandal is hardly a young one. The original investigation that uncovered the scandal took place in 2005, and the court order that made refunds mandatory was handed down in 2011. Nonetheless, there are still thousands of claims being made every week, and each month sees hundreds of millions of pounds paid out in refunds and compensation.

Many people are only just discovering that they were mis-sold PPI, and many more remain completely unaware. A quick look over the details of the scandal can help you to work out whether you are due a refund.

Who Might be Affected?

In short, anybody who has taken out credit in recent years might have been affected by the scandal. This includes mortgages, credit cards and personal loans to name a few of the most common examples. Payment protection insurance is designed to cover your monthly repayments if you are made redundant (excluding voluntary redundancy). As such, it can theoretically apply to almost any kind of credit agreement and as such it has been sold and mis-sold with a wide range of different loan products.

When can I Claim?

PPI in itself is a legitimate and often useful product, so not everybody who has had a PPI policy of any kind is entitled to a refund. If you were a victim of mis-selling, however, then a refund is your basic legal right. There are several circumstances that lead to a PPI policy being classed as mis-sold. Perhaps the most shocking example is that some people had PPI attached to their credit agreement without even being told. Others were given policies that were unnecessarily comprehensive in order to bump up costs, or that were designed to ensure they would never be eligible for a claim. One of the most common, and arguably most subtle, tactics involved failing to make customers aware of their rights. When taking out credit, you have a right to shop around for a better PPI policy and you should have been told this by your lender. However, many lenders fostered the idea that customers needed to settle for their own PPI policy.

Making a Claim

If any mis-selling tactics were used to sell you a PPI policy, you have a right to make a claim. You can do this yourself or turn to a claims management company to handle your case for you in return for a portion of the money you claim back. If you are unsure where to begin with your claim or which approach to take, you may wish to seek out more information from the PPI Claims Advice Line website.

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High Interest Current Accounts

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People don’t tend to think of current accounts as a savings option. After all, in the vast majority of cases this is an accurate viewpoint. The standard arrangement is that current accounts are for the funds you many need to immediately access, while savings sit in a dedicated savings account amassing a more generous interest rate.

However, there are a few accounts which shake up this traditional state of affairs. High interest current accounts provide you with the same immediate access to your funds as any other current account, but higher interest rates than many savings products. Currently, TSB and Nationwide both offer 5% current accounts, with 2% and 3% products on the market from a range of other suppliers. This can be a hugely beneficial arrangement, but naturally there are also drawbacks to consider such as charges and restrictions.

The Advantages of High Interest Current Accounts

The main advantages of a high interest current account are obvious. It allows you to benefit from a high interest rate, allowing your savings to build up over time, increasing in value over time. Some high-interest current accounts are inflation beating – something which is attractive even in a savings product in the current market – meaning that the value of your savings will grow in real terms

Some high interest current accounts offer rates that rival or even beat savings accounts which require your money to be tied up and inaccessible for a period of some years. However, far from restricting your funds, you will be placing them in a current account and having the same easy access that any other current account would give. Your money can be accessed through your debit cards, cheques, standing orders, online payment systems and all other such means.

The Disadvantages of High Interest Current Accounts

If current accounts offered the same interest as the best savings products with no drawbacks, savings accounts would quickly become obsolete. As you might expect, however, these very solid advantages come with some very definite drawbacks.

Often one drawback is simply a limit on the amount of money that can benefit from the impressive rate on offer. Nationwide’s and TSB’s market-leading 5% rates, for example, only apply to balances of up to £2,500 and £2,000 respectively. In Nationwide’s case, the rate is also only temporary and will drop to 1% after the first year.

Furthermore, there will almost always be a requirement that you pay in a minimum amount each month, often £500 or £1,000.

Some accounts will also have a fee. For example, Santander offer a current account with a respectable 3% interest valid on balances between £3,000 and a generous £20,000. However, as well as a requirement of at least £500 monthly funding there is also a fee of £2 every month.

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ISA Shakeup is Good News for Savers

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One of the biggest consequences of this year’s budget is a big shakeup of the way ISAs work. This July, New Individual Savings Accounts (NISAs) will replace existing ISA options, giving savers more flexibility and the chance to save more of their money without paying tax on interest.

The NISAs will replace both stocks and shares and cash ISAs, and in a sense they will be a combination of the two. Currently, only around half of the total ISA limit can be saved as cash. Anything up to the full amount can be invested in shares and put into a separate stocks and shares ISA.

When the NISAs come in, however, cash and shares can be placed into the same ISA. There will also be no separate limits on cash savings. Savers will be able to use any combination of cash and shares up to the total limit, including saving the full amount as tax.

The limit on the amount that can be saved in this way is also going up. Currently, it stands at £11,520 through the course of the tax year. After the New ISAs are introduced, however, it will be upped to £15,000.

Various banking and saving organisations welcomed the announcement of the ISA shakeup, including Nationwide Building Society. Nationwide’s Chief Executive Graham Beale welcomed them as a way to “reduce confusion on the differing amounts which could be saved in cash and stocks and shares.” Beale also said that, of greater significance still, it would give people added flexibility when it came to their tax-free savings.

Junior ISAs are also seeing their limits raised. Along with Child Trust Funds, they will enable parents to save up to £4,000 in the tax year for their children, replacing the current limit of £3,720.

According to government estimates, around six million savers in total throughout the UK stand to benefit from these changes, which have been hailed as the biggest shakeup of ISAs since they were first introduced.

A number of other changes relating to savings were also announced in the budget. For example, the 10% tax rate that currently applies to the first £2,790 of income from savings over the personal allowance, will be abolished. This stands to leave around one million more savers free from tax. More generous limits to premium bonds and the introduction of new “pensioner bonds” which offer market-leading interest rates for the over 65s were also welcomed by savers.

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Four Tips When Asking for a Pay Rise

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There are several reasons you may want to ask for a pay rise. You may have just finished a period of particularly hard or successful work or taken on new responsibilities. It may be that you simply haven’t had a pay increase for a long time, or perhaps  you are being offered a new job and feel you deserve or need a higher salary than the employer is suggesting.

However, asking for a pay rise can be a difficult process. As well as the possibility of simply being refused, many people are worried about seeming demanding or rude. Nonetheless, there are several steps you can take to help maximise your chances of success.

Be Confident and Polite

Try not to feel too nervous about bringing up the subject of a pay rise. As long as you are polite, you do not need to worry about seeming rude. As long as you do not seem arrogant and don’t make threats such as leaving the company, you are unlikely to damage your relationship with your boss. However, while you should not seem cocky you should still be confident and prepared not to give up too easily.

Do Your Homework

You will be in a stronger position to negotiate higher pay if you know what you are worth. Find out what the usual pay is for somebody in your field at your level. Try to find out about the pay scale within your company specifically, and what people within your department and at similar levels in other departments are being paid. This will help you know what sort of raise you can ask for realistically, and give you evidence to use when negotiating.

Focus on the Future

Even if you have just completed an exemplary project for the company, you cannot rely on this alone to justify your pay rise. While it is not completely irrelevant, you want the company to pay you more in the future and to keep doing so. In order to justify this, you need to reassure them that they can expect value for money. Talk about what you can bring to the company, and when you mention your past achievements use them as evidence of what you can do in the future as well.

Be Flexible

Negotiations are two-way. If your employer is not willing to meet your requested pay increase, be prepared for a compromise. It would be foolish to lose the chance for any rise at all or to risk damaging your working relationships because you are set on a bigger increase. Try also being prepared to accept alternatives, such as a better benefits package outside your monetary salary.

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Expedient Money Compensation in PPI Claims

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If you are a victim of the PPI fraud in UK, you can get your money back more quickly by approaching the PPI claims procedure in a particular way. One of the best methods of getting a fast PPI refund is to get the aid of a PPI claims company, who usually can help you get the money fast and easily.

Why Use PPI Claims Company?

If you browse online, you will find suggestions that point to the benefits of claiming the PPI money all by yourself. This can be done by sending a direct letter to the bank concerned. Though this has been effective in the past, banks have become more alert now and try their best to stop you from getting the refund. This is the main reason for using a claims company. With an expert guiding, you can expedite the process and get your money back easily.

Considerations in PPI

PPI policy was widely sold by banks as well as credit card companies some years back. Nearly everyone who took a loan or credit card was sold a policy. The PPI scam started because most of the policies were not legal. The terms or the conditions stated in the policy were not conducive for the borrower to claim money from the policy. The reality is that PPI is an optional addition only. Since the banks were exposed eventually, they were forced to give out a refund. But this may not continue for long. So you need to get PPI help immediately to get the compensation you deserve.

If you want a proper, quick and lasting solution, you need to ensure first that you are eligible for the claim and then send a letter to the bank concerned whether on your own or through a claim company. In most cases, the PPI claims are refunded within six weeks.

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Resurgence for Savings Accounts That Beat Inflation

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2013 has seen a drastic improvement in the situation for those looking to make the most of their savings. At the start of the year, only three accounts offered an interest rate capable of beating inflation. Following the recent drop in inflation to 2.1%, there are not 51 accounts on the UK market that offer enough interest to beat inflation.

Of these 51 accounts, 24 are cash ISAs and 27 are fixed-rate bonds. However, you are required to tie up your money for at least three years if you want to benefit from inflation-beating interest rates.

These figures apply to those who pay tax at the basic rate, at least in the case of accounts that are subject to tax as opposed to ISAs. In order to still beat the inflation rate after tax, basic rate taxpayers need an account to pay at least 2.63% interest. New three year savings accounts that fit into this category have recently been launched by both Leeds Building Society and Virgin Money, both offering an interest rate of 3%.

However, higher rate taxpayers will still face more difficulty in finding an account that will grow their savings at a rate that counters or exceeds depreciation from inflation. At least 3.5% interest will be required after tax, meaning that savers in this category will have to turn to seven year bonds to find sufficient rates.

MoneyComms expert Andrew Hagger recommends sticking to accounts that tie up your savings for two years at most. He points out that the difference in rates between these accounts and their three year counterparts is not large, meaning that there will not be a very big difference in earnings unless you are investing a very large amount of money. The shorter terms make it easier to switch accounts when in line with changes in rates, which can ultimately lead to benefits as well as simply meaning your funds are not tied up for as long.

A recent addition to the market for these two year accounts includes a 2.4% fixed bond from Shawbrook Bank, which is currently a market leader. This rate compares to 2.65% for the same bank’s equivalent three year bond.

Regarding the current state of rates, Hagger points out that there is “plenty of noise” surrounding data on the issue at present. This is partly due to the Funding for Lending, scheme, which is due to reach an end next year.

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Why Trust Your Savings to Smaller Banks?

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The UK seems to be nicely recovering from the economic crisis that has plagued us for so long. But nonetheless, the credit crunch has taught us an important lesson. With all levels of society feeling the squeeze and “too big to fail” banks hitting rocky waters, the recession showed us how vital it is to ensure your savings are safely and wisely invested.

If you want to ensure your savings are safe in the event of future economic meltdowns, you may be surprised by one of the most useful and least well-known pieces of advice. Smaller banks are often safer in the event of economic problems.

The temptation is to think that bigger banks are like big businesses – secured by their sheer size when trouble hits, and with enough backing to see them through any troubles. But the recent recession showed us that this is not always the case.

Smaller banks, on the other hand, tend to favour secure investments and more careful lending policies. When trouble hits, this can mean they are the ones who survive relatively unshaken. Contrary to many people’s expectations, they often offer some of the most competitive interest rates on your savings as a result.

One smaller but still well-known banks include the Cooperative Bank . This particular example also has two other key advantages. Firstly, it is backed by a successful business, giving it extra buoyancy in rough economic waters. This advantage is also shared by some banks tied to similar businesses such as Tesco and Marks and Spencer’s. Secondly, the ethical investment policy means your savings help make the world a better place.

There are also some more obscure banks that are similarly worth considering. For example Reliance Bank is smaller than the Cooperative Bank and much less well-known, but is still an excellent provider of banking services. Though small it has shown great resilience so far, existing since the late 19th century. Perhaps surprisingly, it is owned by the Salvation Army, with proceeds supporting their work.

As you might expect, there are some disadvantages to choosing a smaller bank, but these are less than you might expect. They mostly relate to the very small banks such as Reliance. If you bank with them, you will not be able to make a balance enquiry on most cash machines, and will only have access to telephone banking during standard business hours. One thing you might expect to be a problem – the lack of high street branches – is actually no obstacle for most people. Paying in is handled in branches of a nominated major high street bank.

 

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